The ABS recently released births data for 2019 noting a very sharp fall in fertility to the lowest in our history. This was no surprise now that the Government had at last stopped forecasting a sharp rise in fertility.
Rather than forecasting Australia’s fertility rate rising to 1.9 births per woman as it did in the 2019 Budget, the Government now appears comfortable with the prospect that our long-term fertility rate may settle at around 1.6 births per woman.
But what if it keeps falling as it has in countries such as South Korea (0.98 births per woman); Japan (1.37 births per woman); Spain (1.35 births per woman); Italy (1.32 births per woman); Greece (1.29 births per woman); Poland (1.44 births per woman); Croatia (1.43 births per woman); Taiwan (1.18 births per woman); Singapore (1.22 births per woman); Hong Kong (1.36 births per woman); Serbia (1.44 births per woman); Portugal (1.31 births per woman); Canada (1.51 births per woman); and Thailand (1.5 births per woman).
Differences in fertility rates are largely explained by three main factors – availability of affordable contraception; education of girls; and support for families with young children.
For Australia, the key to preventing fertility falling further and possibly into the low fertility trap that the above countries find themselves in will the level of support for families with young children, including childcare and early education opportunities.
If fertility was to fall into the low fertility trap – generally defined as a fertility rate below 1.5 births per woman – population ageing would further accelerate and bring forward the year in which deaths exceed births. If Australia’s fertility rate did fall below 1.5 births per woman, deaths could exceed births as early as 2030 if net migration was around zero and sometime during the 2050s with net migration at 175,000 per annum.
Deaths in 2019 reached a record 169,000 (see Chart 2). Deaths will continue to rise strongly over the next 20 years, reaching over 200,000 by 2027. The rate of increase in deaths will accelerate once the early baby boomers start approaching 80 years of age (ie around 2035).
In the meantime, we will see an acceleration in the stock of retirees in Australia which have increased from around 2.9 million in 2008-09 to around 3.9 million in 2018-19.
This will result in a steady decline in tax revenue per capita and a major increase in the costs of the age pension, health and aged care. It will also put downwards pressure on average monthly hours worked per adult aged 15+.
Abul Rizvi PhD was a senior official in the Department of Immigration from the early 1990s to 2007 when he left as Deputy Secretary. He was awarded the Public Service Medal and the Centenary Medal for services to development and implementation of immigration policy, including the reshaping of Australia’s intake to focus on skilled migration, slow Australia’s rate of population ageing and boost Australia’s international education and tourism industries.
Comments
3 responses to “What if Australia’s fertility rate keeps falling?”
As the baby boomers face old age and inevitable death, undertakers become the Nation’s growth industry! A declining birth rate must surely be ringing alarm bells with governments and their policy advisors. This will be compounded in the next few years buy a decline in immigration due to covid-19.
Why is the birth rate declining to such an extent? I would argue its due to the pressure on household budgets.
I would also argue that the problem with Australian is not low wage growth, but rather the cost of housing, education and general living.
Education and housing are areas that Governments should be addressing.
One of the great outcomes of Covid-19 is the rebalancing of the power of the States over the Commonwealth. I would encourage the States to grasp this opportunity and hold onto it. Let’s get away from centralization of everything in Canberra and make our Federation work as it should!
As a Georgian (subscribe to the philosophy of Henry George), I would argue that the States should exercise their power under the constitution and collect the economic rent on the land. -A universal land tax with no exemptions, collected on every title of land.
If the economic rent is collected by society then it will provide more than sufficient funds for the state to:
1. Provide free child care.
2. A well funded primary and secondary public education system.
3. Free Tertiary Education. ( University and TAFE). And much more.
But the biggest contribution will be by collecting the economic rent on the land the cost of land will fall. That will:
1.Make housing cheaper allowing more young people to buy a home.
2. Make farm land cheaper allowing young farmers to enter farming, help reduce the cost of food.
3 Forcing those siting on lazy assets to put those assets to work or else exit the land.
These measures will act as a stimulus and create a more efficient and productive economy:
Not good for banks of course!
A falling birthrate is not a “trap.” It’s exactly what the whole world desperately needs.
Australia’s pre-Covid-19 rate of population growth, from immigration and natural increase combined, was one of the highest in the OECD. Population boosters include the property and retail industries and the Roman Catholic Church.
Transitioning to a stable population, assisted by a falling birth rate and lower immigration rate, would help mitigate greenhouse gas emissions, air pollution, biodiversity loss, land degradation and the overuse of water. It could also help governments to improve our inadequate infrastructure.
Our low rate of refugee intake could be doubled, even when total immigration is reduced.
Concerns about declining per capita tax revenue from an ageing population are based on the outdated notion that a sovereign state that issues its own fiat currency has to balance the budget like a household. It’s time for that simplistic ideology to be debated more vigorously.